Why, Oh Why?

It baffles many Americans to hear, and sometimes to experience, that
people in other countries dislike them. After all, they sacrifice their blood
and treasure to right things, and introduce the principles of individual freedom,
in awkward places around the world. Needless to say, when dislike mutates to
actual terrorist attempts, Americans find the perpetrators’ motives simply
unfathomable.

From that perspective, it was a fair question which George W. Bush posed after
the 9/11 attacks: “Why do they hate us?” Unsurprisingly, quite a bit of research
has been done on this question in the aftermath, most of it arriving at the
conclusion that the US’s foreign policy elicits the terrorists’ wrath: they
can’t stomach the overall political and military dominance of the USA in the
international system and its involvement in external conflicts, be it through
military aid or interventions.

CESifo researcher Tim
Krieger and his colleague Daniel Meierrieks, in their
latest CESifo Working Paper, come to a somewhat wider-ranging conclusion.
Using data for 149 countries for the period between 1970 and 2007, they
present evidence suggesting that anti-American resentment is not only incited
by US foreign policy, but also by the rise of capitalism. Importantly,
though, this is only true when they consider capitalism as social market-capitalism,
in the sense of the economic norms theory.

Social market-capitalism defines capitalism “as a way of life: the extent
to which citizens in a society regularly contract with strangers located in
a market to obtain goods, services and incomes.” This leads individuals, through
the routine of signing contracts with strangers, to develop the habit of trusting
strangers and preferring universal rights, impartial law, and liberal democratic
government. In other words, conducting economic transactions via markets and
contracting produces a specific set of norms and values.

Thus, our researchers’ results suggest that anti-American terrorism has actually anti-market roots.
When economies undergo the transition from clientelism to market-capitalism,
societal groups that have benefited from the pre-market clientelist-traditionalist
order of society (the old elite and their economically vulnerable clientele,
traditionalists and the religious) may intentionally target the USA to effectively
voice dissent and rollback pro-market developments and punish the 'hegemon'
for its perceived role in capitalism, globalisation and the Americanisation
of their societies.

Surprisingly, this implies that anti-American terrorism is not rooted in economic
liberalisation (i.e., the opening up and deregulation of international goods
and capital markets) and thus cannot be curtailed solely by the increased interdependence
that accompanies economic globalisation, and by the economic gains induced
by trade and financial openness.

Market-capitalist development, however, also has countervailing beneficial
effects. Anti-American terrorism is less likely to originate from countries
that are similar in market-capitalist terms to the USA. Again, this is consistent
with economic norms theory.

Market-capitalist countries have no incentive to produce or promote terrorism
directed against the USA as the most important market-capitalist economy. Rather,
the USA and other market-capitalist economies share similar interests in promoting
international market growth (which benefits all of them) and in the expansion
and persistence of liberal-democratic institutions that underpin a global status
quo favourable to them.

The double-edged effect of market-capitalist development on anti-American
terrorism has important policy implications. The US may become a less likely
target of transnational terrorism by (peacefully) subsidizing and propagating
the establishment of market-capitalist economies. For instance, pro-market
interest groups in clientelist economies may be strengthened through US support
for domestic programmes that foster the creation of independent judicial institutions
(to allow markets to function properly) and counter corruption (to diminish
the influence of the old clientelist elite).

Crucially, however, the disruptive political, economic and cultural effects
of the marketisation process cannot be disregarded, as they may very well incite
anti-American terrorism. Here, the USA may help to make the transition process
as bearable as possible for groups in foreign societies that may develop anti-market
resentments. For instance, the USA may help to insulate the economically vulnerable
from the most adverse consequences of marketisation by means of sound trade
policy and directed development assistance geared at increasing local economic
opportunities.

Now, if the US foreign policy can be fine-tuned so as to dampen its negative
effects, perhaps taking more account of local sensibilities, the US could more easily achieve
both the Pax Americana and more free-market capitalism.